Exhibit 10.1











July 14, 2004






Peter Shepard

1246 North Ontare Road

Santa Barbara, CA 93105






Dear Peter:




The purpose of this letter is to confirm the transfer of
your assignment as Senior Vice President for Business Development from a full
to a part-time (10%), position. The terms and conditions of the transfer are as
follows:












	TITLE:	





Senior Vice President, Business
Development


    
	 	





 

    
	SUPERVISOR:	

Josh Levine, President/CEO


    
	 	

 

    
	EFFECTIVE DATES:  	

August 1, 2004.


    
	 	

  

    
	BASE SALARY:  	

10% of base pay  NOTE: This is the rate
of base pay that will
be used to calculate all other compensation-related benefits,
including any applicable bonus and/or  severance  pay-outs.


    
	 	


_____________                    ___________________

Employee                                         Company




    
	 	

  



    
	BONUS:  	



Any bonus payout will be prorated (10%).




    
	 	



 



    
	STOCK OPTIONS:	



Continued participation in the
Company stock option program,
including vesting of awarded options per defined schedule.




    
	 	



 



    
	BENEFITS: 	



All standard health and welfare benefits
will remain in full effect, including monthly car allowance, and full monthly
premiums will be paid by Company. 




    
	 	



 



    
	TRAVEL: 	



Travel
required by business needs will be reimbursed in accordance with Company policy
and guidelines.


    






 


Mentor Corporation is committed to a standard of excellence
in the products and services that it provides to its customers.  Our employees
have participated in our efforts to meet this commitment and to achieve a
standard of excellence.  Because the company and its employees are judged on
their performance and results, it is important that both retain the ability to
determine their own relationships with one another.  Accordingly, either the
employee or Mentor can terminate the employment relationship at will, with or
without cause, and with or without advance notice, at any time.  No one other
than the President/CEO of Mentor Corporation has the authority to enter into
any agreement for employment for any specified period of time, or to make any
agreement contrary to the foregoing.  Any agreement contrary to the foregoing
must be in writing and signed by the President/CEO of Mentor Corporation and
the employee.





 


 




Any salary figures provided to an employee in annual or
monthly terms are stated for the sake of convenience or to facilitate
comparisons and are not intended and do not create an employment contract.




When you have signed this letter, it, along with your Employee
Confidentiality Agreement and the Employment Agreement dated November 28, 2000,
will together constitute the entire agreement between you and Mentor concerning
your employment.  




If the above meets with your approval, please sign the
original of the two letters enclosed indicating your acceptance of this agreement. 
Please return the original to Corporate Human Resources by July 16, 2004.
The copy enclosed is for your files.












Signed By:






/s/JOSH LEVINE                                                                               7/14/04

Josh Levine                                                                                       Date

President/CEO








Accepted By:








/s/PETER SHEPARD                                                                      7/15/04

Peter Shepard                                                                                   Date

Senior Vice President








 








 
















Cc:      Human
Resources